Stocks Rise On Restrained US Inflation
That, combined with Trump extending by 90 days a trade truce with China, cheered investors.
New York jumped after the US consumer price index (CPI) reading for July showed annualised inflation at 2.7 percent, unchanged from a month earlier.
European markets were likewise boosted by the US reading, with all but Frankfurt rising.
While the headline CPI figure was lower than expected, underlying price increases indicated that Trump's tariffs were nevertheless starting to ripple through the US economy.
Core inflation, which strips out volatile costs such as food and energy, accelerated in July to the fastest pace in six months.
"Clearly, this is good news for a US economy that is beginning to show signs of stress at the edges," said Lindsay James, investment strategist at Quilter, a wealth management firm.
"Inflation from tariffs is beginning to feed into the core figure but not yet at the stage that is a major concern for markets," he said.
The dollar slipped against major currencies. Investors calculated that the CPI data was not enough to sway the US Federal Reserve away from an expected interest rate cut next month.
The US central bank, which has an inflation target of two percent, also has to weigh other recent data, including signs in the labour market of slower economic growth.
"Financial markets imply a high likelihood that the Federal Reserve will cut rates in September and on balance we think this report shouldn't significantly shift those expectations," said Richard Flax, chief investment officer at Moneyfarm, another wealth management company.
Aoife Mclarnon, a project consultant at Camarco, a financial advisory firm, warned: "This gentle cooling of the economy will certainly not justify a cut of interest rates to one percent as President Donald Trump is calling for."
Oil prices were lower, after OPEC's latest growth projections maintained estimates for 2025. The oil cartel raised its demand forecast for 2026, with expectations for stronger global activity.
Trump's announcement on Monday that he would put off reimposing sky-high levies on China to November, to give more time for talks, buoyed market sentiment.
Stock markets in Asia rose on the news, with Tokyo hitting a record.
"Although an agreement is yet to be agreed, the can has been kicked down the road and that is enough to maintain the market mood," noted Kathleen Brooks, research director at XTB trading group.
Investors are also awaiting a summit between Trump and Russian leader Vladimir Putin on Friday, with the US president playing down the possibility of a breakthrough in ending the war in Ukraine.
In corporate news, China's real estate giant Evergrande Group said on Tuesday it will delist from Hong Kong Stock Exchange in the wake of its 2021 default. The company is emblematic of a years-long crisis in China's property market.
New York - Dow: UP 0.5 percent at 44,202.50 points
New York - S&P 500: UP 0.5 percent at 6,402.09
New York - Nasdaq: UP 0.5 percent at 21,495.81
London - FTSE 100: UP 0.1 percent at 9,138.06
Paris - CAC 40: UP 0.3 percent at 7,720.96
Frankfurt - DAX: DOWN 0.3 percent at 24,000.18
Tokyo - Nikkei 225: UP 2.2 percent at 42,718.17 (close)
Hong Kong - Hang Seng Index: UP 0.3 percent at 24,968.68 (close)
Shanghai - Composite: UP 0.5 percent at 3,665.92 (close)
Euro/dollar: UP at $1.1626 from $1.1617 on Monday
Pound/dollar: UP at $1.3470 from $1.3435
Dollar/yen: UP at 148.34 yen from 148.12 yen
Brent North Sea Crude: DOWN 0.6 percent at $66.26 per barrel
West Texas Intermediate: DOWN 0.7 percent at $63.45 per barrel
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